The Retirement Guys: Think global

Many years ago, I (Mark) was a young kid of 9 years old and found myself being driven through the city of Seoul, Korea. I couldn’t believe I was there and was excited to find out more about a city and country that I had heard a lot about, but was now in the middle of. There were wall-to-wall people, taxicabs and city buses everywhere, and very heavy traffic on the city streets. Drivers honking their horns at each other (which in Korea is not considered rude), mothers carrying their babies on their backs amid the hustle and bustle of the big city. My parents had made the life-changing decision to go to this foreign country to become missionaries and to help various Korean communities start new churches.

In Korea there was such a different view of personal space and so many people packed into the area that it was not considered rude to bump into or brush against someone. My friend Lorne and I would later play a game that involved walking in a straight line down a busy street bumping into as many people as we could for a laugh. We Americans used to laugh at how many Korean people would cram into an automobile. When we thought the car had five more people than would be comfortable, they would cram in five more. To this day when I get into an elevator and the people inside seem to start getting nervous about their personal space, I laugh to myself and think of Korea. I left there in 1975 and if I remember correctly the population of the city of Seoul was about 6 million. The population today is more than 10 million. I guess they are cramming even more people into cars and elevators.

As you might expect, living for five years in a foreign country from age 9-14, had a profound effect on my life. First of all, while I was there I realized there were many things I took for granted in my home country. At that time, you could not pick up the phone and get a pizza. American food was not readily available. Ladies from our home church had canned for us what was supposed to be a four-year supply of Fritos corn chips that did not last a year. No more Fritos? Nope. You have to eat rice today. Aw, mannnn! Come on! American television? One channel on Armed Forces Television that was all the bad rejected boring documentaries that no one wanted to watch here in America. I was so desperate for American TV that when we did finally make the trip back to America five years later, my parents decided it would be a good idea to stop and visit beautiful Hawaii on the way. I stayed in the hotel room almost the entire time watching TV. I couldn’t tell you much about Hawaii.

We are now in a global economy rather than just limited to our own country. Amazing how a small country about the size of Indiana has affected us. I now own a Samsung TV (how ironic) and see Hyundai and Kia automobiles everywhere. As The Retirement Guys, we try our best to stay up on what is going on in the world to better advise our clients. We are now seeing an extremely high correlation between what is happening in foreign countries and our economy. Steve Hanley, who is in our portfolio management department, shared with me how it is now important to understand that everything globally can be correlated. It is important to know what is going on in places like Greece and the rest of Europe. We Americans think our country has a spending problem when we consider our current national debt, but Europe has had the same problem that is about five years ahead of our own. This continues to play itself out, affecting markets around the world. Steve said that even when considering American companies, close attention is paid to their international operations in order to get a better handle on what may be yet to come.

We can all learn things from our childhood and past experiences. It is amazing how an experience of a little kid living for a brief time in a foreign country can still have an effect on his life today. Time goes by quickly and the world seems to get smaller.

For more information about The Retirement Guys, tune in at 1 p.m. Saturdays on 1370 WSPD or visit www.retirementguysradio.com. Securities and Investment Advisory Services are offered through NEXT Financial Group Inc., member FINRA / SIPC. NEXT Financial Group Inc. does not provide tax or legal advice. The Retirement Guys are not an affiliate of NEXT Financial Group. The office is at 1700 Woodlands Drive, Suite 100, Maumee OH, 43537. (419) 842-0550

Retirement Guys: Avoid the debt time bomb

I, Nolan, watched on TV as the U.S. national debt reached more than $15 trillion. That is now a debt of more than $48,000 for every man, woman and child in the country (www.usdebtclock.org). The sad part about it is my two boys, who are only 8 and 5, don’t even own a treehouse, but together have a debt our country has placed on them of nearly $100,000 and quickly growing.

Our elected leaders failed to reach any agreement in cutting the debt while reports across the pond in Europe are enough to make any investor wonder how far the ripple effect will go. As the global debt problems continue to grow, families can take one simple step to avoid the debt time bomb from going off at home.

Here is our country’s current financial picture. According to the Congressional Budget Office, $1.2 trillion in automatic spending cuts are set to kick in between 2013 and 2021 because our politicians couldn’t reach an agreement. Although that sounds like a big number, it is only about 3 percent of the projected spending. Knock a lot of zeros off the projected $40.3 trillion government spending during that time frame and the cuts are is like a family spending $40,000 a year reducing its spending by $1,200.

Cutting spending by 3 percent is a good step in the right direction, until someone looks at how bad it has recently gotten. Gross debt to Gross Domestic Product (GDP) is now more than 100 percent. This means that our country’s debt is now equal to the value of all goods and services produced in a year. Looking back 10 years ago, we were at 58 percent gross debt to GDP. Our country’s spending isn’t getting any better either. The U.S. fiscal year ended Sept. 30. This year’s $3.5 trillion spent is double what the government spent in fiscal year 2000, according to the Treasury Department. Long-term, the debt picture looks very troubling as well. Long-term entitlements such as Social Security, Medicare and the prescription drug program could topple our country.

On the surface, the problems overseas may seem like their problems to deal with, but that may not be the case. China, Japan and the UK are the top three foreign countries that own our treasuries. Our government currently owes more than $2 trillion to foreigners based upon the most recent September 2011 report. Then there is the International Monetary Fund, which has been involved in many of the global bailouts. Their website states “The International Monetary Fund (IMF) is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.”

One might think that with 187 countries, the United States has little at stake. Not true — the IMF uses a “quota” system to determine which countries have to put in the most money, based upon a complex formula. And guess who has to put in the most money? Yup, you guessed it, the good old United States of America. Meaning me and you are on the hook for a lot of the bailouts given by the IMF.

Remember, there is one easy way to avoid the debt time bomb from going off at your home and that is to pay off and stay out of debt. I know, it is boring and it can take some hard work to accomplish. I, like many Americans, have gotten better in 2011, but keep pushing forward, eliminate more debt and build up reserves.

If you eliminated all of your debts, how much would you have left over each month to spend or save the way you wanted?

For more about The Retirement Guys, tune in Saturdays at 1 p.m. on WSPD or visit www.retirementguysradio.com. Securities and Investment Advisory Services are offered through NEXT Financial Group Inc., Member FINRA / SIPC. Not an affiliate of NEXT Financial Group. The office is at 1700 Woodlands Drive, Suite 100, Maumee, OH 43537. (419) -842-0550.